Contract note is a document which is sent from one contractor to another, containing details of the trade or transaction. Usually it includes transaction tax (if applicable), money value of the transaction, price, the full title of the security, money value of the transaction, delivery or settlement instructions, commission, etc. "Also known as a confirmation or a bought note, if related to a purchase, a sold note if a sale (cf. comparison ticket)".
A contract note is a confirmation of transactions made on a specific day for and on behalf of the client in a format specified by the exchange. It sets a legally binding relationship between the client and the member in relation to the settlement of the exchange transactions, as provided for in the contract. Contracts notes are drawn up in duplicate, the customer and the member shall keep one copy. "The client is expected to sing on the duplicate copy of the contract note for having received the original".
Contract Note preparation
After reaching an agreement between the parties concerned in relation to the price, a contract note is drawn up between the broker and the client. Detail data such as umber of scrips, the price, names of parties, date of transaction, brokerage, etc are included in the note.
SEBI member/Sub-broker registration number
The investor should assert that the signed agreement/confirmation contains such details as the SEBI member/Sub-broker registration number. In addition, trade details such as trade time, quantity, price, brokerage, settlement number, order number, trade number and detail of other levies must be mentioned. The commercial price should be shown separately for the brokerage house.
Role of the broker
The broker emits a contract note to the buyer in terms of all the orders that are executed during the day. This note specifies the obligations of the parties concerned to ensure that the buyer has made the payment and the intermediary supplies the scripts. Adequately, payment is made and scrips are picked up by the buyer, which means the conclusion of the contract.
Consignment of payment of money to the broker should be asserted at once upon getting the contract note for sale or purchase, but in any case, before the prescribed pay during the day.
Steps in stock trading
Steps in stock trading:
- Client registration
- Order placing
- Order confirmation
- Trade confirmation
- Contract note
- Delivery & clearing
- Share transfer
Delivery and clearing
After the contract notice is made, the delivery of the shares is carried out through an instrument called the "transfer deed”. The transfer document is signed by the transferor (seller) and is legalised by a witness. Contains data on the transferor, in addition bearing the stamp of the selling broker. There are different types of delivery. For example, in the case of "spot delivery", the transaction is settled by delivery, and payment is made on the date the contract was concluded or the following day. In the case of "hand delivery", delivery and payment are made within 14 days from the date of conclusion of the contract. Delivery and payment are effected within 14 days from the date of the contract. Delivery and payment can be completed after 14 days, as specified during the contract in the case of special special or specified delivery. Delivery and removal of the security is done through the clearance house.
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Author: Maciej Michałek